Hire in Malaysia

Here’s where you get started with human resources best practices and hiring in Malaysia.

Currency of Malaysia

Malaysian Ringgit (MYR)

The Capital of Malaysia

Kuala Lumpur

Time Zone in Malaysia


Important Facts About the Country of Malaysia

Climate in Malaysia

Located near the equator, Malaysia’s equatorial climate means the country is hot and humid throughout the year. The average rainfall is 250 centimeters (98 inches) a year and the average temperature is 27 °C (80.6 °F). The climates of the Peninsula and the East of Malaysia vary. The climate on the peninsula is directly affected by wind from the mainland while the East hosts more maritime weather. Malaysia experiences the El Niño effect, which reduces rainfall in the dry season.

Climate change is likely to have a significant effect on Malaysia, elevating sea levels and yielding more rainfall. This will likely increase flood risks and potentially lead to large droughts. Malaysia faces two monsoon seasons. These are the Southwest Monsoon from late May to September and the Northeast Monsoon from October to March. The Northeast Monsoon, originating in China and the north Pacific, yields more rainfall compared to the Southwest Monsoon, which originates from Australia’s deserts. March and October serve as transition periods between the two monsoons

The Culture of Malaysia

The culture of Malaysia is inspired by the varied cultures of the different people of Malaysia. The first people to inhabit the area that is now Malaysia were indigenous tribes, which still remain. The Malays followed, migrating from mainland Asia during ancient times. Cultural influences from China and India made their mark when trade began with those countries. This influence increased with immigration to Malaysia. Other cultures that have heavily influenced Malaysia include Persian, Arabic and British. Malaysia’s many different ethnicities maintain their own unique and distinctive cultural identities, with some crossover.

Languages Spoken in Malaysia

The official language of Malaysia is known as Bahasa Malaysia/ Malay language. Malay is spoken by most of the country and is taught extensively in the country’s public education system. English, Mandarin and Tamil are also very commonly spoken in Malaysia.

Malaysian Human Resources at a Glance

Employment Law Protections in Malaysia

Employment law in Malaysia is governed by the Employment Act (EA) 1955. The EA sets out certain minimum benefits that are afforded to applicable employees. However, the ambit of the Employment Act (EA) 1955 changed on 1 January 2023 pursuant to the Employment (Amendment of First Schedule) Order 2022, in conjunction with the Employment (Amendment) Act 2022. The EA 1955 now applies to: any person who has entered into a contract of service, regardless of their salary. However, the following provisions in the EA 1955 will not apply to employees who earn more than MYR 4,000 per month:

  • section 60(3) – overtime for work on rest days;
  • section 60A(3) – overtime for work in excess of working hours;
  • section 60C(2A) – allowance for shift work;
  • section 60D(3) – overtime and allowance for work on public holidays;
  • section 60D(4) – overtime for work on holidays on half-days;
  • section 60J – termination, lay-off and retirement benefits; and
  • employees engaged, irrespective of the amount of wages:
    •  in manual labour;
    • in the supervision of employees engaged in manual labour;
    • in the operation or maintenance of any mechanically propelled vehicle;
    • in certain capacities in any vessel registered in Malaysia; and
    • as domestic employees.

There are also laws related to statutory contributions, i.e. EPF, SOSCO, IRB and EIS. The minimum wage is RM1,500 effective 1st May 2022.

Employment Contract in Malaysia

Contracts must be concluded in writing and include a provision for termination.

Non-EA employees will be governed by the terms of their employment contracts and subject to any other applicable statutory requirements (e.g. minimum retirement age, SOCSO, EPF, etc.). In other words, employers are mostly free to set any benefits for non-EA employees, assuming those employees agree to these benefits by accepting and signing the employment agreement. That being said, even for non-EA employees, most employers still use the EA benefits as a guideline or “bare minimum.”

Contracts can be in any language, as preferred by the employer. However, they are generally in English. Courts can use an English version if there is a dispute.

Standards are similar to those that would apply in other jurisdictions and are adjusted for local requirements.

The minimum retirement age is 60 in Malaysia, which is based on Retirement Act 2012.

Work Rules

The registration of work rules is not required. However, it is a recommended practice to establish and implement work rules, company policies, procedures, employee handbooks, etc. These should all be duly acknowledged by employees during the acceptance of an employment offer.

Malaysia's Guidelines Regarding Probation Period/Trial Period

There is no legal requirement in Malaysia to put an employee on probation before they are hired. However, this is recommended as a best practice for hiring in the country. There is also no fixed minimum or maximum probationary period that needs to be imposed. However, a probationary period in the range of three to six months is common. It is a recommended business practice to apply a three-month period for non-executive and non-management employees. For executives and management level employees, it should be a six-month period.

The purpose of instituting a probationary period is to protect the employer in the event an employee covered by the EA brings a complaint of dismissal without justification or excuse. In recent years, the ability for employees to lodge a complaint of dismissal without justification or excuse has led to a series of case law on the legality of termination of employment. If the EAt states there is a probationary clause for the employee, then the confirmation letter or extension letter must be distributed.

Examples of termination include termination for misconduct and termination for redundancy. However, courts will consider the genuine nature of redundancy dismissals and the seriousness of misconduct (e.g. habitual neglect of responsibilities, fraud, dishonesty, etc.) with a high degree of scrutiny. Hence, as a recommended practice, employers should carefully document misconduct. This way, they can furnish evidence and support dismissals prior to any termination decisions. The EA doesn’t distinguish between probationers and confirmed employees. However, case law does provide that there is no “automatic confirmation” as a probationer who has not received a confirmation letter is still a probationer – even if the probationary period has ended and the employer continued to engage the employee.

A probationer will enjoy the same rights as a confirmed employee in Malaysia. Therefore, a probationer’s service must not be terminated without justification or excuse. A probationer continues to be a probationer even at the expiration of the probationary period, if his or her services had neither been terminated nor confirmed at the end of the period.

Severance Pay in Malaysia

Retrenchment benefit:

  • 10 days wages for employment less than two years
  • 15 days wages for employment more than two years but less than five years
  • 20 days wages for employment more than five years

The best practice for severance pay is to follow the EA.

Malaysian Laws Regarding Overtime

Standard working hours must not exceed eight hours in one day or 45 hours in one week. If an employee earns below MYR 4,000 per month, he or she will be eligible for overtime and follow provisions of the EA (maximum 104 hours). If an employee earns more than MYR 4,000 per month, overtime pay will depend on company policy per the contract. For EA employees, overtime should be paid according to when the overtime happened.

  • Normal working days: This is to be compensated at 1.5x times the hourly rate of pay.
  • Rest days: If the duration does not exceed half the normal hours to work, the employee receives half day’s wages at the ordinary rate of pay. If the duration is more than half but does not exceed the normal hours of work, they are entitled to one day’s wages at the ordinary rate of pay. The rate goes up to 2x the hourly rate of pay if the time exceeds normal hours.
  • Public holidays: Work performed on these days are compensated at 2x the hourly rate of pay for the first eight hours. After eight hours is exceeded, this goes up to 3x the hourly rate of pay.

Malaysia's Requirements Regarding Notice Periods

According to the EA, notice periods depend on the employee’s length of service:

  • Less than two years: four weeks
  • Two to five years: six weeks
  • Five years or more: eight weeks

It is always better to provide more than two months of advance notice.


  • Termination is generally very difficult in Malaysia.
  • Terminating employees without valid reason can constitute unfair dismissal.
  • Valid reasons for termination include but are not limited to poor performance and misconduct.
  • Employers can decide on the notice period required and have this agreed in the contract of employment.
  • In cases where the contract is silent on the length of notice period, the notice must not be less than the following statutory amounts depending on the employee’s length of service:
    • Less than two years: four weeks
    • Two to five years: six weeks
    • Five years or more: eight weeks.
  • Court case due to unfair dismissal can lead to a mandatory payment of 24 months’ salary

Post-Termination Restraints/Restrictive Covenants

Employers can include non-compete clauses in employment contracts, but they must meet the exceptions outlined in the Contracts Act 1950. The enforceability of these clauses depends on the reasonableness of their terms, considering geographical limits, duration, and business nature. Employers should avoid restricting general knowledge and skills, but can prohibit the use of confidential information and client lists. Balancing their interests with employee rights is crucial when formulating non-compete clauses.

Rules Regarding Bonus and 13th Month Pay in Malaysia

  • Companies in Malaysia usually only pay discretionary performance bonuses
  • This is typically equivalent to at least one month’s salary.
  • Bonus payment depends on the company’s performance, usually following the financial year end or during festive season

Directors or Officers (registered)

  • No special tax rules. There are resident versus non-resident rates
  • 30% of taxable income for non-resident rates. The tax calculations will be considered as resident if stay more than 182 days in Malaysia

Other Standard Items

Common job allowances can be offered in Malaysia, such as parking/petrol allowance, handphone allowance, etc.

These are generally subject to income tax. Basic salary and fixed allowances are taxable.

Typical Non-statutory Benefits for MNC

  • Companies should at least cover the general practitioner consultation fees under the company’s medical benefit.
  • Depending on the industry, companies may provide accident or life insurance to employees .
  • Housing allowance, transport allowance, children school fee, return flight ticket are available for expats.

Tax and Social Security Information for Employers in Malaysia

Income Tax in Malaysia (National tax)

Monthly Tax Deduction (MTD) is a tax collection scheme whereby it is compulsory for each employer to deduct from the salary of each employee following a schedule as determined by the Income Tax authorities for payment of income tax of the employees. The tax deduction is for the income derived in the current year.

  • Income Tax for Resident Individuals: Individuals will be entitled to tax scale rates from 0% to 30% with personal reliefs subject to physical presence in the country exceeding 182 days.
  • Income Tax for Non-Resident Individuals: Individuals will be taxed at a flat 30%. This applies to those with less than 182 days in Malaysia in a year).

For calculating MTD, the estimated monthly tax payable amount is deducted from salary. Employers will pay this amount to the Inland Revenue Board (IRB) (‘Lembaga Hasil Dalam Negeri’ LHDN) by the 15th day of the following month.

Income brackets and tax rates for the assessment year 2023:

Taxable Income (MYR) Tax Rate (%)
0-5,000 0.0
5,001-20,000 1.0
20,001-35,000 3.0
35,001-50,000 6.0
50,001-70,000 11.0
70,001-100,000 19.0
100,001-400,000 25.0
400,001-600,000 26.0
600,001-2,000,000 28.0
>2,000,000 30.0

Local (or Resident tax)

Payment of tax is deducted through MTD.

Annual calculations and filings depend on individual earnings and the number of dependents.

Social Security

The following statutory benefit schemes apply in Malaysia to employers and employees, irrespective of whether they are an EA employee or a non-EA employee:

Employees Provident Fund(EPF): EPF is a social security institution setup to provide retirement benefits to Malaysian workers. It still covers the pension funds, but now employees can withdraw their savings for specific purposes like house ownership and medical purposes. All employers and employees (except foreign workers) must contribute to EPF at the minimum rates of 12% to 13% (threshold is MYR 5,000 per month) by employers and 11% by employees of the monthly wages (applies to basic pay, fixed allowances and annual bonus).

Foreigners holding an Employment or Visit Pass and whose monthly salary exceeds MYR 2,500 are exempted from the compulsory contributions. All others contribute 11% of their monthly wage while the employer pays MYR 5 per person per month.

Social Security Organization (SOCSO): SOCSO is a social insurance scheme that offers protection to employees who are Malaysian citizens and permanent residents. It covers industrial accidents, occupational diseases, accidents, invalidity or death. For employees who are less than 60 years of age (Category I), contributions payable by employers and employees are for the Employment Injury Scheme and Invalidity Scheme, where employer’s contribution is 1.75% and employee’s contribution is 0.50% of the employee’s monthly wage (capped at MYR 5,000).

All employees who have not reached the age of 60, must contribute under the First Category except for those who have attained 55 years of age and have no prior contributions before they reach 55 due to non-eligibility under the Employees’ Social Security Act, 1969.

For eligible new employees who are 55 years of age or 60 years old and above, they must be covered under the second category (Employment Injury Scheme only). PERKESO has also announced that effective from January 1st, 2019, employers in Malaysia who hire foreign workers with valid documents must register their employees under SOSCO and contribute to the Employment Injury Scheme (Second Category), where employer’s contribution is 1.25% and employee is 0%. The deduction amount is based on SOCSO’s contribution table.

Employment Insurance System (EIS): SOCSO has implemented a compulsory EIS effective from Jan 2018. EIS is implemented as a platform to provide temporary financial assistance and job employment assistance to employees who lost their employment

** Requirements**

  • All employers are required to contribute for each staff (except for government sector, domestic helper and self-employment)
  • Employees from age 18 to 60 years old (except 1st time contributors with age 57 and above)
  • Applicable for local employees only

Monthly Contribution

  • Employers and employees will each have to contribute 0.2% based on the monthly wages
  • The contributions is capped at a salary level of MYR 5,000 a month, which means that although a person may earn more than MYR 5,000 a month, his/her contribution is fixed at 0.2% of MYR 5,000
  • Employers must contribute within the stipulated period, which is on or before the 15th of the month following the wage month
  • Employers must be registered at the respective statutory offices

Human Resources Development Fund (HRDF): This is a mandatory levy payment collected by the HRDF from employers from all industries. It is for employee training and skills upgrading of the Malaysian workforce.

It is mandatory for companies with 10 or more local employees to contribute and the contribution rate is 1% of the monthly wages of each of their Malaysian employees. For companies with 5-9 local employees, it is optional and the contribution rate is 0.5%.

Social Security System Monthly Salary Cap (MYR) Employer Contribution Employee Contribution
Employment Provident Fund (EPF) – Local only No Cap For salary <RM5,000: 13.0% For salary >RM5,001: 12.0% 11.0%
Social Security Organization (SOSCO) 5,000 1.75% 0.50%
Employment Insurance System (EIS) 5,000 0.20% 0.20%

*The above rates serve as a broad guideline. Actual rates charged will differ.

Important Information for Malaysian Employees

Salary Payment

  • In Malaysia, salary is paid once a month. This usually happens any time between the 25th day to the end of month. It must not be paid later than the start of the next pay cycle. A worker is to be paid within seven days following the last day of any wage period, usually a month.
  • Payment method: Usually by interbank Giro directly to the employees’ bank accounts or by check.
  • Payment is for the current month. Arrears are allowed for special cases (e.g. new joiners who missed payroll cutoff).
  • The wages must be paid by end of the day on employee’s officially last day (Termination)


A payslip is usually made available online or in PDF. However, some companies may still give out carbon-sealed payslips.

Required information for the payslip includes but is not limited to the below:

  • Company name and address
  • Month of payslip
  • Staff personal information (e.g. name, employment ID, position/designation, department, date of join, statutory membership numbers)
  • Monthly earnings, allowances and deductions
  • Year-to-date earnings, deductions and net pay
  • Monthly employer’s statutory contributions
  • YTD employer’s statutory contributions
  • Disbursement details (e.g. employee’s bank account information)


  • The use of timesheets will depend on the company.
  • Scope: Aspects of effort required to deliver work will depend on the staff’s grade level.

Holiday Allowance

The disbursement of overtime is available to EA employees and employees with agreed contractual terms. This could be a replacement for time off. The common rate for overtime during public holidays is triple the normal rate.

Annual Leave

According to Section 60E of the Employment Act 1955, annual leave depends on length of service:

  • Less than two years: eight days per 12 calendar months
  • More than two years but less than five years: 12 days per 12 calendar months;
  • More than five years: 16 days per 12 calendar months

Note: Companies can provide more than the above provision by Law.

Annual leave can be prorated if an employee has worked less than a full year in that calendar year

Some companies practice prorated or earned leave on a quarterly basis.

Approval from immediate superior before utilization of annual leave can be required.

Carry-over rule for unused leave: This will depend on company policy. Some employers do not allow for unused leave to carry forward. If the practice is allowed, the leave must be utilized within a specified period. Otherwise, it will be fortified.

Employers are required to pay out unused leave only in the case of termination or resignation.

Sick Leave

If hospitalization is not required, the allowed time for sick leave depends on the employee’s length of service:

  • Less than two years: 14 days
  • More than two years but less than five years: 18 days
  • More than five years: 22 days

The Amendment Act of 2022 provides a full 60 days of hospitalization leave in a calendar year on top of standard sick leave. The provision of sick leave remains unchanged.

A medical certificate is required for all occasions related to sick or medical leave.

Maternity & Child Care Leave

  • All female employees, including non-EA employees, are entitled to 98 consecutive days of paid maternity leave for the birth of up to five surviving children.
  • Paternity leave: A married male employee is entitled to 7 days of paid paternity leave for each birth, up to 5 births (irrespective of the number of spouses).
    The male employee must have worked for the same company for at least 12 months before paternity leave can begin. He must also have told his employer about his wife’s pregnancy at least 30 days before she is due to give birth or as soon as possible after the baby is born.
  • Maternity leave is granted upon giving birth or the 22nd week of pregnancy (in case of premature birth).

Other Statutory Leave

The following types of leave may be given at the discretion of the employer:

  • Marriage leave
  • Compassionate leave
  • Examination leave

Trade Unions

Trade unions are usually relevant to manufacturing and banks. There are no general requirements.

Rules Regarding Visas and Foreign Workers in Malaysia

General Information

Work permits last between six months and five years, depending on the duration of the work contract and the type of visa. Applications for Malaysian work permits are filed within Malaysia.

The Malaysian government issues three different types of work permits:

  • Professional Visit Pass is issued to foreigners employed by an overseas company but working with a company in Malaysia. This pass is suitable for technical experts, trainees and volunteers. The Professional Visit Pass is valid for short periods of around six months to a year.
  • Temporary Employment Pass is for unskilled or semiskilled workers in the manufacturing, agriculture, construction and services fields. They must earn a salary of less than MYR 5,000. The pass is valid for two years, with extensions available on a yearly basis. In order for the pass to be issued, quota approval must be granted by the Local Center of Approval, Ministry of Foreign Affairs.
  • Employment Pass applies to those wanting to work in Malaysia and possessing specific skills, generally in technical or managerial positions. It is usually issued for a minimum period of two years. Before an Employment Pass can be issued, the foreign worker’s employment must be authorized by the Expatriate Committee (or the relevant regulatory agency).

Currently, there are restrictions on the number of foreign workers a Malaysian company can employ. To hire foreign workers, a company will have to prove to the government that the potential employees and their positions are of vital importance and that the job cannot be filled by a local. The approval of the employment will be granted by various regulatory agencies in conjunction with the Immigration Department. This will depend on the industry and the nature of work the foreigner will be undertaking. Once the approval for the appointment has been granted, the company can then begin the application process on behalf of the expat.

Foreigners and expatriates who wish to work in Malaysia are required to obtain permit passes from the Immigration Department of Malaysia with a minimum salary of MYR 5,000 and with at least a two-year employment contract. Entry into Malaysia is regulated in accordance with the Immigration Act 1959/63, Passport Act 1966 as well as Immigration Regulations 1963.

The average application time frame is usually two to three months. However, it can be shorter or longer, depending on the completeness of the required documents.

Public Holidays Recognized by Malaysia in 2024

Occasion Date
1 New Year’s Day January 1
2 Thaipusam January 25
3 Federal Territory Day February 1
4 Chinese New Year February 10 – 11
5 Hari Raya Puasa April 10 – 11
6 Labor Day May 1
7 Vesak Day May 22
8 Agong’s Birthday June 3
9 Hari Raya Haji June 17
10 Awal Muharram July 7
11 Merdeka Day August 31
12 Malaysia Day September 16
13 Prophet Muhammad’s Birth September 16
14 Deepavali October 31
15 Christmas Day December 25

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